Why invest into Michigan

What is happening in Michigan Real Estate?
At any given day, thousands of houses are lost to banks who take possession of them because the homeowners can't afford the mortgage any more due to many reasons: death in the family, loss of a job, divorce, bankruptcy, substance abuse problem, etc. This is a very sad situation but it is reality. Every day in Michigan alone - in the counties where we live and operate our real estate investment business - we see over 1700 foreclosures going through the court system - every single month. Every month thousands of people lose their home. The bank needs to recover the mortgage balance owed to they, and the only way it can is to go through the court system, buy back the house via a "Sheriff Auction", wait for at least 6 months before they can evict the homeowner. The bank now owns the house and uses a realtor to sell it.

Reason why we are getting good deals on properties …
Banks are not in the real estate business - they are in the business of lending money and earning interest. It is an industry known fact that the banks lose about 40% on a foreclosured property. This is due to the fact that:
• the property usually needs updates and repairs,
• the longer the house does not sell, the more bills the bank is responsible for including, all property taxes, utility bills, security, and maintenance.
• Don't forget they might have $100,000 or more already locked in a defaulted mortgage
• the longer the house stays vacant, the greater the liability for the bank.

In the banking industry, a foreclosured property is called a "non-performing asset" - meaning it is not earning them any income. To make it worst, for every dollar of "non-performing assets" the bank has to hold ten dollars which cannot loan out. One bank said its costings them $1 million dollars on top of the mortgage balances owed to them for every 500 foreclosed houses it has. The simple fact of the matter is that banks hate foreclosures - it exposes them to unwarranted liabilities, less profits, and most importantly that money is now locked in a "box" instead of earning interest somewhere. Most banks want a quick sale, collect their cash, and write off their losses in their next year tax returns and move on.

Here is the rest of the story that other people don’t see …
Michigan appreciation is flat in most parts of the state with excepts in a handful of towns. So where is it going … Here are the hard facts by looking at some examples 1) Miami Florida, its jumping off the charts as investments today … why is that, just a few years ago if you remember, Miami was the nations murder capital, drugs, gangs, properties going into the dump, etc. Miami was dragging the lower part of Florida down. Reputation was stay out investors. One day, the citizens started to take back the city, here we are 10-15 years later, and Miami is the star area to buy as investor since they have double digit appreciations, they are no longer referred to as the murder capital. 2) Los Angeles California, its jumping off the charts also … why, before Miami it was the murder capital of America and hate crimes was high. Now, look what is happening … the town is cleaning its self up and the real estate game is booming. Why California is booming because of the big cities clean themselves up and the state takes off. We can give other examples but here are some of the names Washington DC, Virgina, New York Downtown.

So where is the next hot spot like this for me the investor how wants to get in early. Michigan! Look what is happening to Detroit. No longer called the murder capital of America. Big investment dollars are being pumped into detroit proper commerical side with new Ford Field for lonely lions, CoAmerica Park for tigers, talk about new hockey areana for red wings and many other office building renovations and new construction. Cleaning up the neighborhoods around downtown area with new constructon, specially designed neighborhoods plus other companies updating their plants like the old Chrysler plant torn down and replace with a new modern multiple billion dollar investment for their Jeep product.

Michigan is in a slump with unemployeement on the raise. Delphi declaring bankruptcy, automotive sales are down for General Motors and Ford Motor Company. Both are talking large layoffs and union wages being cut. Closing of plants outside of Michigan and inside. So, it just looks like it going to get worse. Those layoffs to OEM's employee's mean downstream effects on Tier 1, 2, & 3 supplier and possibly some going out of business. Which utlimately means more unemployeement in Michigan. Which implies a big surge of houses on the market either at discounted to sell or foreclosures.

So, why is Michigan the buy, because of the TURN. Michigan is transitioning from Industrial based state over to a blend of Industrial / Information Age / Persuasion Age. Michigan was so industrized that it is going through the TURN over to new industry based. Just take a quick look at what is happening over the next ten years were Michigan will be the meca for Biotech and Computer technology. We currently have BIOtech underway and growing. Computer technology suprises me since we have Boston, Silicon Valley and many other great tech spots but you can see that throught Automotive Alley that is running today and how many companies need top notch tech's. Ann Arbor is beaming with start up companies in computer technology, one of those is Latitude Consulting Group. They are just growing with leaps and bounds.

With the history of how Miami & Los Angeles turned around, and how they are double digit return on investments and talking with a number of outstate investors who have $X Millions to invest, they like Michigan since it is in the TURN state. So, why not you invest into Michigan Real Estate and Foreclosures!

This has been a special note from my dear husband.